2026-07-03 20:02:41
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Meta has been shunned by the market this year for overspending on AI. But something good might come out of it.
Bloomberg reported Wednesday that Meta is building a cloud business to rent out its excess AI compute, muscling onto turf held by AWS, Azure, and Google Cloud.
Zuck poured hundreds of billions into data centers for his superintelligence dream, but he might have bought more than he needs. The stock surged nearly 10% on the news, as the new business could offset some of that rapidly growing CapEx line.
It wasn’t good news for everyone. CoreWeave fell 13% and Nebius dropped 15%. Meta spent the past year as one of their biggest customers. Now it could turn into a massive new rival.
It also sharpens the question of where we are in the cycle: did Meta overspend, or is Zuck embracing a new strategy?
Starting a cloud business also confirms that Meta expects to have capacity worth selling. The generous read is that Meta is betting demand keeps coming, the same bet Amazon made when it launched AWS nearly two decades ago.
Zuck called it “definitely on the table” back in May, noting outsiders ask to buy Meta’s compute almost every week. The company, spending up to ~$145 billion this year on its own moonshot, now has a Plan B: if superintelligence takes its time, collect rent.
Today at a glance:
🦚 Comcast: The Great Unbundling
👟 Nike: Not a Recovery Yet
Comcast is unwinding the ~$30 billion bet it spent a decade defending.
The company is splitting in two, separating NBCUniversal and Sky into a standalone media business, while the parent keeps broadband, wireless, and Comcast Business.
The stock jumped as much as 17% intraday, its biggest move since 2008, before settling up ~5%. Not bad for a name that was down ~22% on the year going in.
This is the second breakup step in less than a year. In January, Comcast spun off its cable networks (CNBC, USA, MS NOW, Golf Channel) into Versant, which fell 13% on its Nasdaq debut and has traded sideways since. The channels were the appetizer. Now the studios, parks, NBC, Peacock, and Sky are leaving too.
Comcast retains the cash machine: the largest converged network across 65M+ homes, the largest WiFi network, and a fast-growing wireless business in a $200B+ market. Michael Angelakis, the former CFO who helped architect the 2011 NBCUniversal purchase, returns as CEO to run the company now shedding it (you can’t make this up.)
NBCUniversal walks away with the IP: Universal Studios, the theme parks (including Epic Universe), NBC, Telemundo, Bravo, Peacock, and Sky. Co-CEO Mike Cavanagh takes over. Brian Roberts, whose family controls both through a dual-class structure, stays “actively involved” in each.
The structure is a tax-free separation in roughly 12 months, with Comcast holding up to a 19.9% stake in NBCUniversal to sell down and cut debt. The buyback is suspended until then.
Q1 made the logic obvious:
Connectivity delclined 1% Y/Y to $20.0 billion, a slow, dependable annuity now under siege from fixed-wireless home internet and Starlink.
Content & Experiences grew +41% Y/Y to $13.0 billion, but only because NBC aired both Super Bowl LX and the Winter Olympics in February. Media revenue spiked +61% Y/Y on events that don't recur next quarter.
One business is a flat-growth utility throwing off free cash flow. The other is a lumpy, hit-driven content engine. Bundling them blurred the story for two very different investor bases, which is exactly the rationale Comcast now cites. After years of insisting the businesses belonged together, Cavanagh told analysts, “(we) simply changed our mind.”
Management swears it isn’t about future M&A. Roberts called the split “absolutely not” a prelude to deals. Wall Street seems unconvinced. Some analysts argued the separation matters less than what it enables: two focused companies, each with its own equity currency and board, free to pursue transactions that were unthinkable inside the conglomerate. It’s a way to unlock value and a clear ramp to dealmaking.
Wells Fargo pegs the sum-of-the-parts valuation at ~$25 per share, barely above today's price, and says the upside requires a transaction. A standalone NBCUniversal could use its own stock to buy content and reach the scale to fight Netflix and Disney. Or it might become a target itself.
Bottom Line: Comcast just conceded the conglomerate logic of the last decade is dead. The split should sharpen both businesses, but the market is already pricing the sequel. A leaner NBCUniversal, Sky in tow, becomes either the sector's next buyer or its next target the moment the ink dries.
Nike’s fourth quarter initially looked like a breakout. Reported EPS jumped more than 5x to $0.72. But the quarter included a $986 million tariff recovery tied to the International Emergency Economic Powers Act, which added roughly 900 basis points to gross margin. Adjusted for that one-time boost, EPS was closer to $0.20, a modest beat against the $0.13 consensus rather than the blowout the headline suggested.
The business underneath kept shrinking. Revenue fell 1% to $11.0 billion in the May quarter ($120 million beat) and dropped 4% in constant currency, nearly two years into Nike’s turnaround.
Reported gross margin hit 49% (+9pp Y/Y), one of the highest in Nike's history, but ~9pp of that was the tariff refund. Underlying gross margin was ~40%, essentially flat and still near the lows of the reset.
Wholesale rose 4% to $6.6 billion.
NIKE Direct fell 7% to $4.1 billion, with Nike Brand Digital down 12%.
The trade kept margins compressed and shrank Nike's own channels, but it did help push North America back to growth.
North America grew 3% to $4.8 billion, with wholesale up 10% as Nike rebuilt the retail relationships it spent years walking away from. Nike Running notched its fifth straight quarter of double-digit growth, adding roughly $1 billion to the category and five points of market share across North America and Western Europe. That was the clearest proof that Hill’s “Sport Offense” (the reorg that moved 8,000 employees into sport-specific teams) could create growth. The progress was real but uneven. A Boston Marathon ad got pulled after backlash, and some World Cup stock missed its retail delivery window.
International was still the drag:
Greater China: Sales fell 12% Y/Y to $1.3 billion (down 17% in constant currency), with segment profit down 20%. Results beat lowered expectations, but local brands like Anta and Li-Ning continued to take share. The "comprehensive reset" Hill is running is expected to weigh on results through FY27.
EMEA: Revenue slipped 1% Y/Y to $3.0 billion, but down 6% in constant currency, so the underlying business is losing even more momentum.
APLA: Roughly flat at $1.6 billion, up 1% Y/Y reported and down 1% in constant currency.
Revenue plunged 32% Y/Y to just $244 million, and full-year sales were the lowest since 2011. Neil Saunders of GlobalData suggested that if Nike couldn't or wouldn't fix the brand, it should weigh an exit before Converse became a drain on management's attention. Hard to argue.
Nike expected Q1 FY27 revenue to be down low-to-mid single digits and earnings roughly flat through Q2 FY27 (excluding the tariff benefit), though gross margin should finally start expanding as early as Q1.
Outgoing CFO Matt Friend was blunt: "We are not expecting the environment to improve meaningfully over the next six months." He warned that Nike's customers were under pressure worldwide. Friend will hand the reins to David Denton, Pfizer's CFO, on August 17. A fresh set of eyes, arriving at an awkward moment.
Bottom Line: Nike's profit surge was a one-time tariff windfall. The stock has fallen more than 30% this year, on track for a fifth straight annual decline. That said, North America and Running are the first hard evidence that the reset can produce real growth after months of inventory cleanup. At ~28x forward earnings, this is still a "show me" story, and the real test comes at November's investor day.
That's it for today.
Happy investing!
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Disclosure: I own AAPL, GOOG, META, NVDA, and TSLA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2026-07-01 20:03:03
Welcome to the Premium edition of How They Make Money.
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🔥 The June report is here!
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✔️ See revenue trends, profit margins, and key takeaways instantly.
We visualized 200+ companies this season:
In case you missed it:
Download the full report below or log in to your account.
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![Screen Recording 2026-06-30 at 5.30.23 PM.mov [video-to-gif output image]](https://substackcdn.com/image/fetch/%24s_!-njh!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fcc4adac7-d137-4355-bf95-18c09073d6d3_800x448.gif "Screen Recording 2026-06-30 at 5.30.23 PM.mov [video-to-gif output image]")
What to expect in this monthly report?
⚙️ Semis: Broadcom, Micron.
🛒 Retail: Home Depot, Lowe’s.
😎 Tourism: Carnival, Vail Resorts.
🤖 AI infrastructure: Oracle, Cerebras.
👟 Consumer brands: Nike, Lululemon.
☁️ Workflow: Adobe, DocuSign, GitLab, UiPath.
📊 Data: C3.ai, HPE, MongoDB, Rubrik, Samsara.
🛡️ Cybersecurity: CrowdStrike, Palo Alto Networks, SentinelOne.
And more, like Accenture, Darden, Didi, Meituan, FedEx, Fox, and GameStop.
2026-06-30 20:02:09
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The May 2026 IPO priced at $185, surged to $386 on opening day, and closed at $311, a 68% pop.
That was the high-water mark. The stock spent the next six weeks giving back most of its gains, and its first earnings report triggered a record two-day plunge that briefly pushed it below the IPO price.
If that round-trip feels familiar, it’s the pattern we walked through in How To Invest in IPOs. The day-one pop is often short-lived, and the first earnings call is where the hype meets reality.
The quarter itself was impressive. Revenue nearly doubled, Cerebras beat expectations, and management raised full-year guidance above consensus.
The problem was not demand. It was the cost of keeping up with it.
Management argues the market misunderstood the softer margin outlook, which is partly due to Cerebras renting back its own chips from a customer while it waits for new data centers to come online.
Let’s review what we learned.
Today at a glance:
🧠 How Cerebras makes money
📊 Q1 FY26 by the numbers
🎙️ Key insights from the call
🔭 What to watch next
FROM OUR PARTNERS
When McKinsey & Company projects $7.1 trillion in AI investment by 2030, it’s not meant just for names like OpenAI, Anthropic, and Google.
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These companies are building the infrastructure layer of the AI future. And their tech is only getting more important with time as demand for AI compute power outruns supply.
While typical data centers take several years to build, BluSky AI deploys modular, AI-ready data centers in months. BluSky AI utilizes less power, little to no water, and minimizes the impact on local communities.
Startups, enterprises, and governments will depend on tech like this. BluSky AI has a robust portfolio of unique sites with negotiated power ready for deployment. Become an early-stage investor in BlueSky AI today.
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We’ve not covered Cerebras before in this newsletter, so let’s go back to basics.
A typical AI processor is roughly the size of a postage stamp. Cerebras builds one the size of a dinner plate: an entire silicon wafer turned into a single chip. Its Wafer-Scale Engine packs ~4 trillion transistors, against ~200 billion on NVIDIA's flagship Blackwell. Cerebras sells it inside a single machine, the CS-3, rather than as a bare chip.
The point of all that silicon is speed. Keeping a model on one giant chip avoids the slow shuffle of data between thousands of smaller ones, which lets Cerebras generate tokens roughly an order of magnitude faster than a GPU cluster. On frontier models, it clears 1,000 tokens per second. The pitch is simple: fast AI is worth a premium because it gets more done.
Cerebras turns that into two revenue streams.
Hardware: Ceberas sells CS-3 systems and clusters to customers who run them in their own data centers. This segment was $111 million in Q1 FY26 (+59% Y/Y), and it’s the legacy side of the business.
Cloud & other services: Customers can rent that same inference horsepower by the token from Cerebras-operated data centers. This segment hit $83 million (+178% Y/Y), growing three times faster than hardware and the strategic center of gravity going forward.
The moat is where it gets interesting. Cerebras sidesteps the exact chokepoints throttling everyone else. It uses no high-bandwidth memory (HBM), no CoWoS advanced packaging, and no bleeding-edge 3nm process, leaning instead on plentiful SRAM and mature 5nm. While the industry fights over the same scarce TSMC and HBM allocation, Cerebras isn’t standing in that line, and it’s the only AI accelerator maker building its systems entirely in the US.
The catch is who’s been paying. Cerebras was, until recently, almost entirely dependent on G42, an Abu Dhabi AI group. Its risk disclosures now name four significant customers: OpenAI, G42, MBZUAI University, and AWS. The bull case rests on the first and last names on that list, turning a UAE-heavy customer base into broader Western enterprise demand.
One quirk of the OpenAI deal shapes the numbers throughout, so it’s worth understanding up front:
The deal: A multi-year agreement for more than $20 billion of Cerebras compute.
The twist: To win it, Cerebras also handed OpenAI warrants (the right to buy its stock at a discount).
The accounting: Those warrants count as a discount, so part of what OpenAI pays never shows up as revenue.
The upshot: The reported figure understates the true size of the OpenAI business, and that gap widens as the deal ramps.
2026-06-27 22:02:07
Welcome to the Saturday PRO edition of How They Make Money.
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Today at a glance:
🌐 Accenture: AI And Iran Hit Demand
🚚 FedEx: Premium B2B Pays Off
🛳️ Carnival: Europe Yields Soften
🫒 Darden: LongHorn Carries The Year
Accenture's Q3 revenue rose 6% Y/Y (3% in local currency) to $18.7 billion ($50 million miss), with GAAP EPS rising 9% Y/Y to $3.80 ($0.11 beat).
New bookings of $19.3 billion fell 2% Y/Y, the first year-over-year bookings decline since Q3 FY25. Shares plunged 18% post-earnings, the worst one-day drop on record, extending the stock's roughly 50% YTD decline.
CEO Julie Sweet flagged two distinct headwinds:
Middle East impact: $100 million Q3 revenue hit plus ~$400 million in sales impact as the Iran conflict slowed decision-making across EMEA. Sweet expects “more impact” in Q4.
Managed services deal slippage: A couple of large opportunities pushed into FY27 for company-specific reasons, creating timing-driven softness.
Accenture announced a $4.2 billion cybersecurity acquisition package: a majority stake in Dragos plus 100% of runZero and NetRise. Sweet called the combination "a first-of-its-kind OT Security platform." The three businesses generate ~$208 million in ARR with 48–53% Y/Y growth. Accenture also launched Accenture Edge, a new mid-market business targeting what it sizes as a $240 billion addressable market, and signaled it will tap the long-term debt market to fund elevated M&A. Total FY26 capital return was raised to at least $9.5 billion. Demand for “large-scale reinvention” continued: 104 quarterly bookings over $100 million year-to-date, up 13%.
Accenture cut the top end of FY26 revenue growth guidance to 3–4% (from 3–5%) and narrowed adjusted EPS to $13.78–$13.90 (from $13.65–$13.90). Q4 revenue forecast of $17.8–$18.4 billion fell short of the ~$18.5 billion consensus. CFO Angie Park said "more of the guided range" is in play, given macro uncertainty.
The stock now trades at its lowest multiple ever, roughly 6x EV/free cash flow. The combined dividend and buyback yield is near 10%. The big question is whether the AI displacement thesis continues to show up in slowing bookings, or whether the capital return profile is starting to make the bear case harder to justify at current levels.
2026-06-26 20:01:54
Welcome to the Free edition of How They Make Money.
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For decades, memory was the invisible commodity inside every device: cheap, abundant, and easy to ignore. Not anymore. A brutal memory crunch is quietly pushing up the price of nearly every device you own, as the world’s top tech giants fight for supply and leave smartphones, PCs, and automotive lines competing for what remains.
That squeeze has a winner on the other side.
Micron just reported the most extraordinary quarter in its history.
Here’s what stood out.
Today at a glance:
☁️ Micron’s blowout quarter
🔒 Trying to break the cycle
🌐 The squeeze everyone else feels
🔭 What to watch next
FROM OUR PARTNERS
AWS built an infrastructure for the cloud and became one of the most valuable businesses in history. The segment made $128 billion in sales for 2025.
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Micron’s fiscal Q3 (ended May 28) was extraordinary by any standard.
Revenue: The top line surged +346% Y/Y to $41.5 billion ($5.6 billion beat).
☁️ Cloud Memory: $13.8 billion (+307% Y/Y).
🖥️ Core Data Center: $11.5 billion (+653% Y/Y).
📱 Mobile & Client: $11.5 billion (+254% Y/Y).
🚗 Automotive & Embedded: $4.6 billion (+311% Y/Y).
Margin trends: Gross margin was 85% (more than doubled Y/Y). Operating margin was 80% (+57pp Y/Y). These NVIDIA-esque margins drove earnings per share up 106% sequentially to $25.11 ($4.25 beat).
Cash flow: Operating cash flow was $25.4 billion (+451% Y/Y). Adjusted free cash flow was $18.3 billion (vs. just $1.9 billion a year ago).
Balance sheet: Cash, marketable investments, and restricted cash reached $30.2 billion. Long-term debt was $5.1 billion (down from $14.0 billion a year ago).
Q4 FY26 guidance: Revenue ~$50.0 billion (~$6 billion above consensus). Gross margin ~86%. EPS ~$31 (vs ~$25.72 expected).
Almost none of the outperformance came from selling more chips. DRAM bit shipments rose only in the low single digits, yet DRAM prices jumped more than 60% in a single quarter, and NAND prices rose in the mid-80s%. Micron is already capacity-constrained, so the shortage isn’t showing up in units. It’s showing up in price.
Now step back and look at the scale.
Micron booked more revenue in three months ($41.5 billion) than in any full fiscal year through 2024, and its data center business alone cleared a $100 billion annualized run rate. A year ago, total quarterly revenue was $9.3 billion.
The market has noticed. Shares are up more than 8X over the past 12 months and jumped as much as 16% after this print. A company worth roughly $150 billion a year ago is now worth close to $1.3 trillion. It’s the kind of move investors usually associate with platform companies, not memory cycles.
The numbers are staggering. The strategy behind them is the actual story.
Memory has always been boom-bust: demand surges, the survivors overbuild, prices crater, everyone bleeds. The cycles culled the field to three main players: Micron, Samsung, and SK Hynix. Their shared discipline on supply is what keeps it tight. For 40 years, the industry’s curse was that every boom financed the next bust. This quarter, Micron tried to turn customer panic into a new floor.
The mechanism is the Strategic Customer Agreement (SCA). It’s a multi-year, take-or-pay contract locking in both volume and price, unlike the one-year handshakes the industry has always run on. Micron has now signed 16, typically five-year deals running through 2030. They already cover ~20% of its DRAM and a third of its NAND, with management targeting 40%+ of total revenue. Customers are backing them with ~$22 billion in deposits and guarantees, including roughly $18 billion of it in cash.
The largest deals set a ceiling at today’s prices, and a floor beneath them. Micron says that even at the floor, gross margins would sit well above its prior cyclical peak of ~60%. For the covered volumes, the old ceiling is effectively the new floor. The minimum value of these contracts is ~$100 billion, which management calls a conservative number, not a forecast.
The most telling example is Anthropic, with a memory and storage supply agreement paired with Micron’s investment in the AI lab’s Series H round. A memory maker buying equity in the very demand it’s trying to lock down.
The pricing power makes those floors believable. Micron’s Mobile and Client unit — the part most exposed to squeezed phone and PC makers — ran an 87% gross margin, up from 24% a year ago.
Business model: Take-or-pay volumes and price floors smooth the industry’s most violent variable. The balance sheet already reflects the boom, and Micron now holds $24.4 billion in net cash. All three agencies upgraded Micron’s credit rating to BBB+.
Competitive moat: The counterparties are the hyperscalers and NVIDIA — the same names that decide HBM allocation. Locking them in deepens an engagement already hard to displace.
Investor angle: The bear case is always about what happens when the cycle turns. A floor margin above the old peak is the most direct rebuttal Micron has ever offered. The caveat is that upfront customer deposits are not free money. They come with future supply obligations.
For decades, Micron's curse was that good times invited the bust. By getting customers to commit volume, price, and cash years out, it's betting it can keep the boom without the hangover.
Micron’s 85% gross margin is someone else’s cost line.
The same shortage minting records in Boise is rippling through the rest of tech. Apple is raising prices, and HP’s memory bill doubled. Micron CEO Sanjay Mehrotra said on the call that there’s “no line of sight” to when supply catches up with demand. He pushed the crunch past 2027, a sharp reversal from earlier guidance that had it easing by next year.
It won’t ease quickly, because adding new supply is genuinely hard. Greenfield fabs take years and run into construction lead times, scarce skilled labor, permitting, and power. Meanwhile, each new node yields fewer incremental bits, and HBM’s heavier wafer appetite eats into everything else. Data-center memory is on track to top half the industry’s total bit demand for the first time this year. Everything non-AI is the residual.
But the edge isn’t only a victim of the crunch. Agentic platforms like OpenClaw and NVIDIA’s NemoClaw are pushing more AI workloads onto devices themselves, where better economics, privacy, and latency all matter. Micron expects that shift, paired with pent-up upgrade demand, to lift the memory inside each phone and PC over time. Today’s squeezed buyers could become the next source of memory demand.
The competition is sprinting after the same wave. SK Hynix, which leads the HBM market, just filed for a ~$29 billion US listing to fund its expansion, and Jensen Huang confirmed NVIDIA will source HBM4 for its next-gen Vera Rubin platform from all three memory makers. The allocation fight among Micron, Samsung, and SK Hynix is far from settled.
The real long-run wildcard sits in China. CXMT and Yangtze Memory are scaling fast, and standard DRAM is fungible enough that OEMs can qualify different suppliers across regions, product tiers, and configurations. Chinese suppliers still trail at the high end, especially in HBM, so this is not the 2026 story. But volume is how that gap closes.
🪜 The margin ceiling: Management itself flagged “a meaningful moderation in the rate of price increases” behind the ~86% gross margin guide for Q4 FY26. The step-up shrank to roughly +1.4pp from the ~+6pp it guided a quarter ago. Some read that as early price softening in 2H26 as SK Hynix adds supply and PC and phone volumes keep contracting. The counter is the SCA floor, which Micron says still clears its old peak.
🔒 How far above the floor: The contract terms are now largely public. Five years, take-or-pay, ~$100 billion minimum. The open questions are concentration (four large customers carry most of it) and how far actual revenue runs above that floor.
🌐 China and policy: Watch whether US export controls on China’s semiconductor equipment access tighten or loosen, and whether CXMT lands design wins at Western OEMs for Asia-bound products.
🏗️ The cost of staying ahead CapEx will jump to ~$10 billion in Q4 (~$27 billion for full-year FY26) and will step up again in FY27, with operating expenses set to rise ~$1 billion as R&D expands. The test will be whether Micron can fund the build without surrendering the balance-sheet discipline it just earned.
Bottom Line: Micron is trying to answer the oldest objection to memory stocks: the boom always invites the bust. This time, customers are locking in supply years in advance because AI has turned memory into a strategic bottleneck. For consumers, that means higher device prices. For Micron, it means margins even NVIDIA would envy.
That's it for today.
Happy investing!
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Disclosure: I own AAPL, AMD, GOOG, and NVDA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2026-06-23 20:02:23
Welcome to the Premium edition of How They Make Money.
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Three companies announced roughly $86 billion in acquisitions in a single week. None of these deals is really about buying revenue.
SpaceX, Salesforce, and Fox are buying control points (the layers customers touch every day) before the market structure hardens around them.
When technology shifts, those layers are the most valuable real estate there is:
The workflow: where work gets done.
The interface: where choices are made.
The distribution layer: where attention is monetized.
The data loop: that improves the product over time.
A scarce asset can justify a premium, but a rushed deal can torch billions. The whole difference comes down to one question: is the buyer acquiring a durable control point, or simply paying up for growth it could not build internally?
Are these companies buying the future, or buying time?
Let’s review.
Today at a glance:
🤖 SpaceX + Cursor
☁️ Salesforce + Fin
📺 Fox + Roku
SpaceX is acquiring Cursor parent Anysphere in a $60 billion all-stock deal, struck four days after its Nasdaq debut.
The headline number is enormous. Cursor was valued at $29 billion in November 2025, then explored funding above a $50 billion valuation in April 2026, before SpaceX exercised its right to buy the company outright at $60 billion.
But the structure matters: SpaceX is paying with stock, not cash.